Stanley Started Talk Of Merger, Rival Says

Stanley Started Talk Of Merger, Rival Says

Newell Still Professes Interest

December 21, 1991|By W. JOSEPH CAMPBELL; Courant Staff Writer

BELOIT, Wis. — The Stanley Works consistently has said a smaller rival's bids for a substantial stake in the Connecticut tool company are uninvited. But the chief executive of the rival Newell Co. said it was Stanley officials who first proposed a merger two years ago.

Merger talks in 1989 progressed to the point where ranking representatives of both companies conferred privately in a Connecticut motel room, the Newell executive disclosed. The talks collapsed, he said, because Stanley officials feared announcement of a merger would set off a bidding war for Stanley.

The Newell executive, Daniel C. Ferguson, made the disclosures during a lengthy interview Thursday at the renovated 19th-century farmhouse where Newell has its executive offices.

Ferguson emphasized that Newell's objective of merging with Stanley is undiminished, saying: "The vision that I would have ... basically is the two companies' being put together as one strong resource."

Newell this month resumed its effort to acquire a significant stake in Stanley -- as much as 15 percent of the New Britain company. It was the latest turn in Newell's overtures to Stanley.

Newell last spring had sought federal regulatory approval to acquire up to 25 percent of Stanley stock. Newell reduced the stake it was seeking as Stanley pressed a federal antitrust suit against Newell, seeking to thwart the stock purchases.

Then, in late August, Newell indicated it no longer intended to buy any Stanley stock, and on Nov. 26, lawyers for both companies agreed to a dismissal of Stanley's antitrust suit.

But two weeks later -- on Dec. 9 -- Stanley announced Newell had again sought Securities and Exchange Commission approval to buy into Stanley.

Ferguson's account of the 1989 talks conflicts with the account Stanley gave in the antitrust suit.

Richard H. Ayers, Stanley's chairman and chief executive, refused again late Thursday to discuss them. "I just don't discuss conversations that may or may not have happened," he said.

The interview was Ferguson's first lengthy discussion about Stanley since Newell's interest in the company was disclosed publicly last spring. Newell again is seeking federal regulatory approval to acquire as much as 15 percent of Stanley's stock.

Ferguson, in the interview, had lavish praise for Stanley, saying he had long envied and admired the company. He also said Donald W. Davis, Stanley's chairman for 12 years until 1989, helped Newell become better known among industry analysts and investment counselors.

Ferguson said a Newell-Stanley merger would be a matter of "2 plus 2 equaling 4 1/2 ." Such a combination would make enormous business sense, he said, because the mass merchandisers to whom both companies sell are becoming ever-larger and ever more demanding.

Newell, a housewares and hardware company, reports most of its sales in cookware, bakeware, glassware and metal and plastic caps -- products that Stanley, the world's leading tool manufacturer, does not make. Newell's sales last year were $1.07 billion; Stanley's were nearly $2 billion.

Noting Stanley's vehement objections to Newell's overtunes, Ferguson acknowledged that a merger might never come to pass. But he said Newell can afford to be patient.

"The interest in Stanley has been there for a long time," he said. "If it happens now, great. If it doesn't happen now, maybe it will happen in 1995."

Ferguson, 64, even suggested that the merger might occur "after I'm long gone."

"We're only going to make it happen," Ferguson said, "if [Stanley's] board says, `Hey, you know, there's some pluses in this thing. At least we ought to talk about it and see what those pluses are, and see how they might work for the Stanley stockholders.' "

Ferguson also said he had no unofficial contact on Stanley's board. "[I] don't have a back channel," he said. "If there is one, I don't know about it."

The Newell chairman's most stunning comments were about how the idea of merging Newell and Stanley came to pass.

Ferguson said: "My initial thoughts on that were, `Hey, you know, let's try to get to know one another.' That's when I proposed that we buy 10 or 20 percent of you and you buy 10 or 20 percent of us and we'll tell the world that we're kind of partners, kind of getting engaged. And let's see how works out."

Ferguson said he broached that idea to Stanley's senior executives -- Davis, who then was nearing retirement as chairman, and Ayers, who would be his successor.

"They saw some problems with it being half-married so to speak," Ferguson said. "And they said, `Hey, why pause there? Let's put the things together?' "